Independent contractor or employee? The legal framework

Over the past year there has been much to do around false self-employment and the question of when working qualifies as an employee or a self-employed person. The Deliveroo ruling was handed down, the enforcement moratorium came to an end and there was talk of a bill of rights. Many employers were at a loss: what to do with my independant contractors? What risks am I running? Are they really self-employed? In this blog, we outline the current legal framework and describe the risks.

The end of the enforcement moratorium

The Inland Revenue's enforcement moratorium has ended as of January 1, 2025. This means that if the Tax and Customs Administration concludes that false self-employment exists, the Tax and Customs Administration will immediately impose correction obligations and additional tax assessments. As of Jan. 1, 2025, the Tax Administration can also impose retroactive additional assessments, but not for the period before Jan. 1, 2025. Exceptions apply in cases of malicious intent or when the guidelines have not been complied with; then retroactivity can go back up to five years. It has been announced, however, that no fines will be imposed in 2025 as part of a "soft landing."

Assessment framework self-employed/employee

Either way, the long-term goal is clear: that false self-employment, in whatever form, will come to an end. For this reason, it is a good idea to scrutinize contracts with freelancers. The legal assessment framework is based on the legal requirements for an employment contract (authority, work and pay) and the points of view arising from the Deliveroo ruling.

Authority, labor, wages

The legal requirements for an employment contract are:

- Authority: this refers to the hierarchical relationship between an employee and employer. For example, an employer gives work-related instructions and determines how and when work is performed.
- Personal performance of work: an employee is required to perform the work personally and is not free to be replaced without the employer's permission.
- Wage: this is the consideration for doing the work, with an employee this is the wage, while a self-employed person is more likely to have an hourly rate or be paid for performance, for example.

Viewpoints Deliveroo

In addition, in the Deliveroo ruling, the Supreme Court formulated the following points of view to evaluate the contract:

- The nature and duration of the work;
- The manner in which work and working hours are determined;
- The embedding of the work (is it the core activity?) and the person doing the work in the organization and operations;
- Whether or not there is an obligation to perform the work personally;
- How the contractual arrangement of the parties' relationship was established;
- The manner in which remuneration is determined and paid;
- The amount of this reward;
- The question of whether the person doing the work is at commercial risk in doing so;
- Whether the person performing the work behaves or is able to behave as an entrepreneur in the course of business.

What is important is that the test is ultimately based on the actual situation (and therefore not exclusively on what is on paper): "substance goes before appearance." In addition, the points of view must be considered in the light of all the circumstances of the case and no single point of view in isolation is decisive. We have extensive experience in cases involving false self-employment and can advise you in this regard.

Risk in addition to after-tax liability

It is important to realize that the risk is not only that the Tax Authorities can claim amounts, but also the self-employed person/employee himself. After all, an employee is entitled to vacation pay, vacation days, continued payment during illness, pension accrual and possibly a transfer fee, among other things. If it turns out that a collective bargaining agreement applies, the worker is also entitled to the terms of the collective bargaining agreement. The worker can then claim this up to 5 years back. Even if the worker himself indicates that he/she does not want to be an employee but a self-employed worker, in principle this is not a circumstance that is taken into account when assessing whether there is an employment contract. This follows from case law. In fact, we often see that the self-employed person then changes his mind anyway if he suddenly finds himself out on the street or falls ill. So in practice, the risk lies with the employer. In the lower courts, however, judgments vary and it remains difficult to predict how a judge will ultimately rule.

Labor relations assessment bill: legal presumption of hourly rate

The bill Verduidelijk Beoordeling Arbeidsrelaties en Rechtsverm presumption is currently pending and its expected effective date is now Jan. 1, 2026. This law also seeks to reduce false self-employment. This law introduces a civil law refutable legal presumption: when the hourly rate is below EUR 32.34 excl. VAT, it implies that the employee is an employee. The proposal clarifies the most distinctive legal requirement for an employment contract, 'working in the service of' (authority). An attempt has been made to draw up an assessment framework using all case law, based on the three main elements (work subordination, organizational embeddedness and working for one's own account and risk). As this bill has not yet entered into force, for the time being the applicable case law applies as the legal framework.

Conclusion

It is advisable to carefully review contracts with freelancers and have a legal assessment of whether there are risks in the context of false self-employment. Questions about this or need support? We would be happy to help.